Case Law Details
ACIT (OSD) Vs GB Springs Private Limited (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) Delhi dismissed the Revenue’s appeal against GB Springs Private Limited concerning additions made under Sections 68 and 41(1) of the Income-tax Act, 1961, for the assessment year 2017-18. The Revenue had challenged the deletion of an addition of ₹63,96,525 under Section 68, relating to unexplained cash deposits during demonetization, and ₹2,64,490 under Section 41(1), concerning the cessation of liabilities. The Revenue argued that the assessee failed to substantiate the source of cash withdrawals and did not establish the genuineness of transactions, as per the Supreme Court ruling in Rupal Jain vs. CIT (2023). Additionally, the department contended that since the liabilities had remained unpaid for more than three years with no pending disputes, they should be considered as income under Section 41(1).
However, the ITAT noted that the total tax effect in the case was ₹50,28,724, which fell below the ₹60 lakh threshold prescribed by the Central Board of Direct Taxes (CBDT) in Circular No. 09/2024, dated 17.09.2024. As per this directive, the monetary limit for filing appeals before the ITAT restricts the department from pursuing cases with lower tax implications. Given this, the ITAT ruled that the appeal was not maintainable and dismissed it accordingly. The decision reinforces the applicability of CBDT’s guidelines in limiting tax litigation and preventing unnecessary appeals on low-value disputes.
FULL TEXT OF THE ORDER OF ITAT DELHI
The Revenue has filed the instant Appeal against the Order of the Ld. CIT(Appeal)/NFAC, New Delhi dated 07.02.2024, relating to assessment year 201718 on the following grounds:-
1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred, in deleting the addition of Rs. 63,96,525/- u/s. 68 of the Act on account of extra amount of cash included in the cash book to justify the huge cash deposit in the bank account during demonetization and ignoring the fact that nature and source of cash withdrawals made by assessee company remained unexplained?
2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred, in deleting the addition of Rs. 63,96,525/- u/s. 68 of the Act, ignoring the fact that assessee has failed to discharge the primary onus cast upon him to prove the nature and source of such cash credit and genuineness of the transaction, in view of the decision of Hon’ble Apex Court in the case of Rupal Jain vs. CIT (2023).
3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred, in deleting the addition of Rs. 2,64,490/- on account of cessation of liabilities u/s. 41(1) of the Act, ignoring the fact that these dues were pending for more than three years and there is no pendency of dispute at any forum has been reported by the assessee against the respective sundry creditors?
4. The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of hearing.
2. None appeared on behalf of the Assessee, despite issue of notice dated 21.8.2024. However, it is noticed that notice dated 21.8.2024 has been received back with the postal remarks “no such company”. In view of the aforesaid factual matrix, we are deciding this appeal of the Revenue, exparte qua assessee, after hearing the Ld. AR and perusing the records.
3. On perusal of Form No. 36 vide column no. 10, it has been noticed that the total tax effect in this case is Rs. 50,28,724/-. Thus, in view of the CBDT’s Circular No. 09/2024 dated 17.09.2024, the appeal of the Revenue is not maintainable, as in view of the aforesaid CBDT’s Circular, the monetary limit for filing the departmental appeals before the ITAT is Rs. 60 lacs. Ld. DR also fairly agreed that the tax effect in this appeal is below the prescribed limit, hence, he has no objection if the appeal of the Revenue is dismissed on account of low tax effect.
4. In view of the above position, we deem it fit and proper to dismiss the appeal of the Revenue in the light of the latest Circular No.09/2024 of the CBDT dated 17.09.2024, as not maintainable.
5. In the result, the appeal of the Revenue is dismissed.
Order pronounced on 03/12/2024.
Author Bio
